Ford, United Auto Workers agree on new labour contract

Contract will bring work to the U.S. from Mexico, China and Japan: Ford

By Bernie Woodall and Ben Klayman

10/04/2011|labour-reporter.com|Last Updated: 10/04/2011

(Reuters) - Ford Motor Co. and the United Auto Workers (UAW) union said on Tuesday they had reached a tentative four-year contract that would allow the automaker to invest almost US$5 billion in U.S. plants and create an additional 5,750 jobs.

Ford declined to comment in detail on how the agreement would affect fixed costs, but said the proposed contract would allow it to bring work to the United States from Mexico, China and Japan.

"We're very pleased that it will improve our competitiveness here in the United States," John Fleming, Ford's head of global manufacturing, told reporters.

The tentative Ford contract must still be ratified by 41,000 workers represented by the UAW. As a first step, UAW officials representing Ford plants will meet in Detroit later on Tuesday to review and approve the deal.

Ford had previously announced plans to add or preserve about 7,000 U.S. factory jobs. The majority of the additional 5,750 jobs to be added will be at entry-level wages, the company said.

The UAW said separately that many of the new jobs would be added by the end of 2012.

Ford pledged that if the contract is ratified it would invest $16 billion in the United States, including $6.2 billion in its own plants. Of that latter amount, almost $5 billion had not been previously announced, Fleming said.

The union had previously negotiated a deal with General Motors Co. that was expected to provide a rough blueprint for the deal at Ford.

Unlike GM and Chrysler, Ford did not undergo a federally funded bankruptcy and bailout in 2009, and Ford's hourly workers have said they expected a richer deal than one ratified last week for 48,500 GM workers.

Credit ratings agency Standard & Poor's said last week that it could raise Ford's credit rating if a new labour deal with the UAW allowed the automaker to remain "solidly profitable" in its home market and kept it competitive with GM.

Union-represented workers at GM, who have not had a base pay increase since 2003, approved a deal that will create or save more than 6,000 U.S. factory jobs, raise wages for entry-level employees, and pay each worker at least $11,500 in bonuses over the four-year life of the pact.

GM said the pact would have minimal impact on profits.

The Ford deal will also include profit-sharing bonuses for workers although the details of those payouts have not been announced.

A ratified contract at Ford will allow the UAW to focus on Chrysler Group LLC, the weakest of Detroit's three automakers and where analysts expect negotiations to be tougher.

Chrysler, majority-owned by Italian automaker Fiat SpA, has about 23,500 UAW-represented workers. Sergio Marchionne, chief executive of both Chrysler and Fiat, is under pressure to hold the line on costs, and a deal at Chrysler may be the most difficult for the UAW, analysts say.

The old contracts at all three automakers were to expire on September 14 but were extended. Chrysler's contract was extended to October 19.